How Lean is Your ERP Implementation?

When we work with smaller to mid-size organizations – especially clients in the manufacturing and distribution space – we find a lower tolerance for overly complicated ERP software selection or implementation processes. Indeed, executives at these no-nonsense, meat-and-potato types of organizations built and grew their companies by providing outstanding customer service, superior operational excellence and unrelenting quality. Not surprisingly, these types of companies are not satisfied with the status quo when it comes to their ERP implementation.

Looking even more broadly across all organizations implementing new ERP systems, it is clear that most find a way to overcomplicate things. In fact, according to our 2013 ERP Report, roughly two out of three organizations experience some sort of material operational disruption at the time of go-live. In other words, despite all their efforts to build great organizations, most leaders find that they are not able to do something as simple as ship products or close the books when all is said and done with their ERP implementation.

It doesn’t need to be this way, however. Just as startups are finding that traditionally cumbersome business planning exercises are futile and overly complex, smaller organizations are leaning toward more pragmatic approaches to their ERP systems. By injecting proven business practices and common sense into their ERP initiatives, our clients have found that they can “cut through the fluff,” so to speak, to make their implementations more successful.

Below are three examples of how organizations can reduce the complexity of their ERP implementations and ensure more of a lean initiative instead:

Prioritize your business processes. New ERP systems may help automate most or all of your business processes but that doesn’t mean that all processes should be treated equally. Instead, when it comes to deciding which areas to engage in business process reengineering, it is important to segregate between your core competitive differentiators and those functions that aren’t unique to your business. Even though most business process reengineering efforts should focus on the former, too many organizations get tripped up by trying to overanalyze business processes that don’t add much end value to the organization. This typically leads to higher complexity, time, cost and risk.

Focus on incremental change rather than too much change at once. In addition, many executives and IT leaders fear that ERP implementations are their one and only chance to make lasting improvements to the organization so they end up trying to change too much all at once. For example, we’ve seen traditionally lean clients try to bite off migration to a shared services model or standardization of global business processes – at the same time they are trying to adjust to a new ERP implementation. Unless you are a large organization with sufficient resources and tolerance for complexity, this is more likely to spread resources too thin and increase risk than it is likely to succeed. Instead, our mid-size clients often find success by phasing their implementations and rolling out new ERP software that is imperfect but a good start toward the incremental improvements they are seeking.

Recognize that more than anything, people will make or break your ERP implementation. Last week, I met with a mid-size distribution company in the northeastern US that had enjoyed successful ERP and CRM implementations in the past. Their secret to success? People. Most organizations tend to focus on less important things like the software, data, reports or technological bells and whistles, but successful organizations understand that people are the key to success. An effective project team and organizational change management strategy are both critical to ensuring this people side of the equation is adequately addressed.

Lean ERP implementations aren’t for everyone. Larger and more naturally complex organizations may benefit from the traditional “big” ERP implementation approaches of the past but for the most part, smaller and mid-size companies don’t have the stomach or patience for these types of initiatives. Just as the world of entrepreneurship tends to be gravitating toward “lean start-up” models that cut through the red tape of over-planning and over-analysis, small and mid-size companies are increasingly looking for the same of their ERP implementations.

2 Comments

Great article from Eric. Its so important for small to medium sized businesses to get the key ERP processes implemented in a simple and effective manner first. Lets make sure we don't over complicate the implementation and try to do to much to start. Once you are up and running there is plenty of time for you in the future to make improvements. Many companies also forgot how much extra workload is placed on their employees and the additional stress that comes with the change over. Keep it simple, get it up and running and then look to ways to improve.

Great Article Eric, If organizations is committed to adopt to the ERP Process's , rather than bringing in software changes it stand to reap benefits faster . Another enabler for lean implementations is by embracing cloud deployments which helps the organizations for quick start and spread the Capex over the period of time ...

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